• Govt accepts P3.5-B initial settlement from Mighty

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    But filing of criminal charges still possible – DoF

    THE government will accept local cigarette maker Mighty Corp.’s initial settlement of P3.5 billion for its tax liabilities, but the Department of Finance (DOF) stressed that such acceptance does not yet mean that it was agreeing to the company’s total settlement offer of P25 billion.

    “We will accept the initial payment,” Finance Secretary Carlos Dominguez 3rd said in a statement released on Thursday.

    The Finance department said it was informed that a manager’s check amounting to P3.44 billion, covering Mighty’s excise tax liabilities, will be issued also on Thursday by JT International Philippines (JTI) and deposited at the Social Security System branch of the Land Bank of the Philippines in Quezon City.

    Dominguez reiterated that even if the government accepts Mighty’s settlement offer, this does not preclude any criminal charges that the Bureau of Internal Revenue (BIR) may file against the company in connection with its tax-related cases, as these cannot be compromised.

    According to the agency, Mighty will pay the balance of P21.5 billion on or after the closing of its proposed deal with JTI.

    Last week JTI confirmed it was in talks with Mighty on the sale of the local cigarette maker’s manufacturing and distribution business and assets to Japan Tobacco.

    Mighty earlier said that its settlement offer sum would be funded by means of an “interim loan” from JTI and the sale by Mighty and its affiliates of its manufacturing and distribution business and assets, along with the intellectual property rights associated with these assets, “including those owned by the company, Wong Chu King Holdings Inc., and other affiliates, to JTI or any of its affiliates for a total purchase price of P45 billion exclusive of VAT.”

    Mighty’s offer was higher than the P3-billion settlement amount suggested by President Rodrigo Duterte in March.

    Three tax cases filed by the BIR against Mighty are pending before the Department of Justice. These cases cover the firm’s non-payment of excise taxes due on its cigarette products and the use of counterfeit tax stamps on its cigarette packs, which correspond to excise taxes amounting to P37.88 billion.

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